Richard Froud, Senior Economist at Barclays:
“The pace of expansion may have become a little less robust, but the performance of the UK economy remains respectable. Alongside the US, it is on course to be one of the strongest performing of the major high-income countries this year.
“Fears of an abrupt slowdown in China have caused global economic headwinds to intensify. But lower energy prices have delivered near-zero inflation and, alongside strengthening earnings growth, given a considerable boost to household incomes. Business and consumer confidence is strong and recent surveys suggest that the service and construction sectors are benefitting from resilient home demand even if weaker global export markets are holding back manufacturing.
“Policymakers are endeavouring to strike a balance between generally buoyant domestic markets and more uncertain global conditions. With global weakness acting as an economic drag, UK interest rate expectations have cooled, with financial markets pushing back to late 2016 the point at which they are looking for the first bank rate rise.
“Smaller business turnover is growing at a pace normally seen during periods of sustained economic expansion. Business confidence has improved and firms are being encouraged to invest more to take advantage of a stronger trading outlook. Many businesses have built a substantial cushion of deposits, which could be used to provide finance, but others may look to borrow. There have recently been signs of a gradual recovery in loan demand.”